The former Victorian premier who made his political mark as a debt-busting crusader for small government and privatisation has urged the Napthine government to borrow whatever it takes to build a comprehensive underground rail system for Melbourne.

Former Liberal leader Jeff Kennett told Fairfax Media that an expanded metro network was Melbourne's top infrastructure priority. ''There's not a major world city that doesn't have one.''

He said future generations would appreciate that earlier governments had had the foresight to borrow while interest rates were low and build public transport. ''In 100 years people won't care about how much it [the rail system] cost.''

'There's not a major city in the world that doesn't have one (an expanded metro system)': Kennett. Photo: Jason South

In comments likely to rile the Labor adversaries he flayed for fiscal profligacy, Mr Kennett said debt was good if used for infrastructure, and money was cheap. ''The public sees debt as a no-no. The public needs to be educated about debt.''

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But his transport vision is also an uncomfortable reminder to the Napthine Coalition government of its 2010 election promises for new rail, including a commitment by former Liberal leader Ted Baillieu to build a train line to Doncaster.

In office the Coalition has deferred a $9 billion plan for a metro rail tunnel to link the western and south-east suburban rail networks, and has all but abandoned Doncaster rail. Instead it has opted for the controversial east-west road tunnel to link the Eastern Freeway with CityLink at a cost of up to $8 billion. On Sunday, Fairfax Media also revealed a VicRoads proposal for the widening of Punt Road to six lanes through Prahran and South Yarra.

Jeff Kennett. Photo: Angela Wylie

Mr Kennett stopped short of arguing for underground rail ahead of the east-west road tunnel, instead urging the government to seize the ''opportunity'' of cheap public borrowings and do both projects. He said because of its access to inexpensive funds it made sense for the government to build the new rail system itself, rather than rely on the public private partnership (PPP) model that is now standard for large projects. A common criticism of PPPs is that private sector usually pays more in interest on borrowings, adding unnecessary cost to projects.

Mr Kennett said another problem was that the PPP companies had to take a profit slice out of major projects.

He also called for a review of government accounting so that borrowings for important transport projects no longer counted as public debt. ''If you borrow money for infrastructure it should be off the balance sheet,'' he said.

From 1992 to 1999 the Kennett Coalition government prided itself on slashing the $33 billion in public debt it inherited from the Cain/Kirner Labor governments. Its program of privatisation, including of electricity and public transport, was widely viewed as being more dramatic than even that of the neo-conservative pin-up, former UK Prime Minister Margaret Thatcher.

But Mr Kennett is also an outspoken champion of nation building and is a fan of big-spending political leaders such as former Liberal premier Henry Bolte.

When it lost office in 1999 the Kennett government was planning its own version of the east-west road connection. Mr Kennett said he was increasingly conscious of Melbourne's need for an extended underground rail system.

When told of Mr Kennett's comments on borrowing and debt, a stunned former cabinet colleague was initially speechless. ''Well, he has changed his mind,'' said the one-time Liberal minister eventually.

On Sunday, transport minister Terry Mulder chose not to comment on Mr Kennett's proposal. He said the question of borrowing for infrastructure was an issue for the Treasurer, Michael O'Brien.

98 comments

Jeff is right. Now.

This is yet another sensible turnaround from him.

It's a shame he didn't listen to wiser folk when he was in power completely screwing people's lives..

Commenter

HiLo

Date and time

August 12, 2013, 7:13AM

Yes, better late than never. Rail is the only forward for Melbourne. The comparative advantage of cars over trains has dropped steeply in recent years, and this is inevitable, no matter how many tunnels, freeways and road widenings occur.

For once I agree with Kennett.

Commenter

djc

Date and time

August 12, 2013, 7:37AM

Jeff now has the advantage of being able stand above politics as an elder former statesman and look at each thing on its merits. He is pointing out the blindingly obvious fact that money borrowed to spend on highly necessary and productive infrastructure is money well invested. With the last major extension to Melbourne's railway system being the Glen Waverly line in 1937, it is long overdue to build lines to new built up areas, most urgently Doncaster/Templestowe, Melbourne Airport, the upgrading of signalling to radically increase the network's capacity and the construction of the Metro. All of these projects are of far greater importance and benefit in reducing traffic congestion than the East West tunnel.

Commenter

Thomas

Date and time

August 12, 2013, 8:46AM

Thanks to the Kennett Govt. when they slashed and closed all the country rail lines, Mildura is STILL without a passenger rail connection.

Commenter

Davy60

Date and time

August 12, 2013, 8:49AM

A sensible turnaround but just like Rudd and Abbott he won't tackle the question of future revenue streams.

They won't go there because it would require having to visit issues like the GST, income tax, capital gains tax and wealth and inheritance tax.

What political debate there is over future revenue streams is deplorable.

Commenter

howardp

Location

Yass

Date and time

August 12, 2013, 9:40AM

The answer for Doncaster is a suspension monorail along the freeway that also runs down Punt Road and right up Doncaster Road - imagine sitting in the carriages looking down on all the motorists sitting there stationary as you fly along above them all.

Commenter

the_Truth

Location

Melbourne

Date and time

August 12, 2013, 9:48AM

What people are forgetting is that when Jeff came to power, the Victorian economy was a basket case. We'd maxed out all our states credit cards. In that situation you don't recommend applying for more. Jeff squared the accounts and it was a real shame he didn't get to share in the good times that followed. Debt used well is a powerful tool for building a future. Unfortunately these days politicians are happy for us to pay much more in the long run than face unfavourable "DEBT" headlines (and who can blame them?)

Commenter

Peter

Location

Oz

Date and time

August 12, 2013, 9:51AM

HiLo,Kennett a "former elder statesman"? Get real: he was an utter failure, and was sent that message loud and clear by the election he thought he had all wrapped up. Indeed, in an ideal world he'd be prosecuted for the injuries he inflicted on the (contemporary) public and future generations. Example: his arrangement with Transurban was a purely ideologically-driven deal that tethered the public to not having a rail link to the airport for 32 years. That wasn't 'governing' - that was just plain stupid, even malicious. The proof of that is in the pudding, but there was much hollering about it at the time that Kennett merely brushed off with his characteristic contempt. Now his views reflect those more of a socialist: he may have matured marginally. But 'forgive' him? Why?

Commenter

Enough

Date and time

August 12, 2013, 9:58AM

@the Truth.

Talking about monorails is a diversion.

One train at peak hour = 700 to 800 cars NOT ON THE BLOODY ROADS.

A huge proportion of those cars that are pouring off the Eastern Freeway into the Hoddle St are heading to the city centre or very close to it. Most of those heading straight ahead down Alexandra Parade are also heading to the city, mainly via Nicholson and Rathdowne. This tells you what you need to know. A railway serving Doncaster/Templestowe, linked to the Clifton Hill line will remove thousands of peak hour cars from Hoddle St, Alexandra Pde, Rathdowne St and the inner city roads! This railway has now been talked about for 123 years!